THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 445/2025
In the matter between:
THE PROFIT HUB (PTY) LTD APPELLANT
and
ZUWON CONSULTANTS (PTY) LTD FIRST RESPONDENT
THOKOZANI LLOYD NDAWONDE SECOND
RESPONDENT
Neutral citation: The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd and
Another (445/2025) [2026] ZASCA 88 (24 June 2026)
Coram: MAKGOKA, SMITH and UNTERHALTER JJA and
NORMAN and MOOKI AJJA
Heard: 5 May 2026
Delivered: This judgment was handed down electronically by circulation
to the parties’ representatives by email, publication on the Supreme Court of
Appeal website and released to SAFLII. The date and time for hand-down of the
judgment is deemed to be 11h00 on 24 June 2026.
Summary: National Credit Act 34 of 2005 (the Act) – application of the
Act – credit facility – s 8(3)(a) of the Act – the distinction between a discounting
agreement and a loan – when is a loan a credit facility – exceptions to the
application of the Act – s 4(1)(a)(i) and s 4(1) (b) read with s 9(4) of the Act –
juristic person – annual turnover – large agreement.
2
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Swanepoel J,
sitting as court of first instance):
1 The appeal is upheld with no order as to costs.
2 The order granted by the high court, is set aside, and replaced with the
following:
‘(i) Judgment is granted against the first and second respondents, jointly
and severally, the one paying the other to be absolved, in the amount of
R785 292.91.
(ii) The first and second respondents are ordered to pay interest on the
amount of R785 292.91 at a rate of 8% per month, from 1 May 2024, until
date of final payment, both days inclusive.
(iii) The first and second respondents, jointly and severally , the one
paying the other to be absolved, are ordered to pay the costs on an attorney-
client scale.’
JUDGMENT
Unterhalter JA (Makgoka and Smith JJA and Mooki AJA concurring):
Introduction
[1] The appellant, The Profit Hub (Pty) Ltd (TPH), brought an application in
the high court, seeking judgment in the amount of R785 292.91, together with
interest, against the first and second respondents, Zuwon Consultants (Pty) Ltd
(Zuwon) and Mr Ndawonde, jointly and severally, the one paying, the other to be
absolved. Zuwon entered into two written agreements with TPH, which it styled
as discounting agreements . Since the characterisation of these agreements is in
3
issue, I shall refer to them in a neutral way as ‘the agreements’. Mr Ndawonde
concluded two written suretyship agreements in favour of TPH. He bound himself
as surety and co-principal debtor for the due repayment by Zuwon of all sums of
money owed to TPH under the agreements. TPH alleged that Zuwon was in
breach of the agreements. Zuwon and Mr Ndawonde concluded a written
acknowledgement of debt and security agreement in terms of which they
acknowledged their indebtedness to TPH under the agreements, and agreed to pay
TPH by way of instalments.
[2] Zuwon and Mr Ndawonde were not able to pay TPH, despite demand, and
TPH thus brought its application to secure payment. The application was not
opposed by Zuwon or Mr Ndawonde. The matter was called in the unopposed
motion court. Swanepoel J raised with counsel for TPH whether the agreements
complied with the National Credit Act 34 of 2005 (the Act). After written heads
of argument were submitted, the high court handed down its judgment. It found
that the agreements were lending transactions, and not discounting agreements,
falling within s 8(3) (a) of the Act, and hence the agreements were credit
agreements to which the Act applies . The high court reasoned that since the
founding affidavit contained no averments that the Act had been complied with,
judgment in favour of TPH could not be granted. The application was accordingly
dismissed. TPH sought leave to appeal to this Court , which application was
granted by the high court. Neither Zuwon nor Mr Ndawonde sought to oppose the
appeal.
[3] TPH’s appeal raises the following issues. First, do the agreements, properly
interpreted, fall within the remit of the Act as credit agreements ? (the
characterisation issue). Second, even if the agreements are credit agreements , is
the application of the Act nevertheless excluded in terms of s 4(1) (a)(i) of the
Act? (the threshold issue). Third, even if the characterisation issue and threshold
4
issue are decided against TPH , should the high court have given a different
remedy, rather than dismissing the application? (the remedy issue).
The characterisation issue
[4] Section 4 of the Act provides that it applies to every credit agreement,
subject to ss 5 and 6, but with certain exclusions, to which I will refer when I
consider the threshold issue. One species of credit agreement is a credit facility.
TPH contended that the agreements, properly interpreted and characterised, are
discounting, and not loan, agreements. Hence, the agreements do not constitute a
credit facility, as provided for in s 8(3)(a) of the Act. Once that is so, it was argued,
the Act is not of application to the agreements.
[5] It is well understood that, to determine whether an agreement is one or other
species of credit agreement, as defined in the Act, we must have regard to the
substance of the agreement, and not merely its form or nominal description.
Section 8 says as much. Whether an agreement constitutes a credit facility is
decided ‘irrespective of its form’. 1 We must, of course, interpret the agreements
in accordance with the well -recognised triad of text, context and purpose. And
then determine whether the agreements fall within what constitutes a credit
facility in terms of s 8(3)(a) of the Act.
[6] TPH submitted that, properly interpreted, the agreements are discounting
agreements. In De Villiers v Roux,2 the court distinguished a discounting and loan
agreement in the following way:
‘Similarly, in the more recent case of the London Financial Association v Kelk (L.R. 26
Ch. Div. 107), Vice-Chancellor, BACON, in the course of a very learned judgment, deals with
the distinction between lending and advancing money, and discou nting, in the following
manner. “The difference between ‘advancing’, ‘lending money’ and ‘discounting’ is distinct
1 See the introductory language in s 8(3).
2 De Villiers v Roux 1916 CPD 295 at 298.
5
and palpable. ‘Discounting’ is purchasing, no t lending. The discounter, whether of a bill or
bond, or any other security, becomes the owner. If the thing bought, turns out, when realised,
to be of less value than the price paid for it, the loss falls upon the purchaser or discounter. If a
profit or gain is made upon the transaction, it belongs wholly and exclusively to the discounter
or purchaser.” The view, therefore, which I expressed during the argument that the relation
between the discounter of a bill or promissory note and the person who presents it for discount
seems rather that of purchaser and seller than that of lender and borrower, is borne out by
authority. The discounter becomes the owner of the note; it is his property and he in turn can
discount it, pass it over to others, or deal with it in any other legitimate way; whereas, if the
transaction were one of the loan of money against the security of the bill or note, the discounter
would not be able to deal with the document in the way described.’
[7] The hallmarks of a discounting agreement of accounts receivables
(invoices), when compared with an agreement for the loan of money , may be
framed in the following way . First, a discounting agreement is a financial
transaction in terms of which a creditor makes over its rights as against debtors to
a third party, the discounter, in consideration of which , the discounter makes
payment to the creditor. It is a disposal of an asset, here the incorporeal rights
constituted by the debt. The original creditor divests itself of these rights in favour
of the discounter in whom the rights vest. The discounter becomes the owner of
the rights and may exercise the rights or, in turn, further discount the debt. A loan
of money, by contrast, is an agreement in terms of which a lender lends an amount
of money to a borrower who is required to repay a sum of money equal to the
amount lent, usually, with interest. In a discounting agreement, the discounter
amount lent, usually, with interest. In a discounting agreement, the discounter
pays an amount to acquire the debt from the original creditor. The original creditor
is not required to repay this amount: the price paid is the consideration for the
acquisition of the debt by the discounter.
[8] Second, in a discounting agreement, the risk attaching to the debt passes to
the discounter. Its profit or loss is a function of what value the discounter can
secure from the debt, as against the cost of acquiring the debt. That is, the price
6
paid by the discounter to acquire the debt. The loan of money by a lender also
attracts risk. But here, the risk arises from the possibility that the borrower will
not repay the loan, with interest. The discounter pays to acquire the debt. The
lender lends money against the right to be repaid, with interest. Not only are the
flows of money different, but the rights of a discounter and a lender are distinct.
[9] Third, in a discounting agreement, the asset acquired (the debt) is not
security for the obligations of the original creditor. As we have observed, what is
paid by the discounter to the original creditor is a price to acquire the asset. The
asset is not security for repayment of monies by the original creditor to the
discounter. In the case of a loan of money, the lender will often require security
for the repayment of the loan, with interest. That security may take different
forms, but it secures the perfo rmance by the borrower of its obligation to repay
the loan.
[10] Plainly, financial transactions may often be complex. And they may be
formulated in ways that involve hybrid derivatives of discounting or loan
agreements. But for the purposes of legal analysis, it is important to be able to
discern the essential characteristics that distinguish a loan from a discounting
agreement.
[11] I turn next to consider the terms of the agreements. The agreements, in their
introduction, describe the transaction as one in terms of which TPH purchases the
invoices of Zuwon, ‘embodied in an out -and-out cession of all right, title and
interest in and to [ Zuwon’s] right to collect the proceeds due in terms of such
invoice . . . ’. The consideration for this purchase is the obligation of TPH ‘to
advance the Advance Amount . . . to the CLIENT’ (that is Zuwon). And the
Advance Amount is defined to mean ‘the ca pital amount discounted by the TPH
to [Zuwon] for the sale of the invoice . . . ’. These terms of the agreements use
7
language of a piece with a discounting agreement. TPH purchases the invoices of
Zuwon; the rights are acquired by TPH under an out -and-out cession; and
payment is made to Zuwon by way of the Advance Amount.
[12] The agreements however go further. Zuwon is obliged to repay to TPH the
entire Outstanding Amount. The Outstanding Amount is defined to mean: the
amount paid by TPH to Zuwon (that is, the Advanced Amount), plus the factoring
fee due to TPH (being, a minimum of 13% of the Advance Amount), plus any
costs incurred by TPH, if any. Zuwon is obliged to repay the Outstanding Amount,
upon receipt by it of payment of invoices by the debtors, and to do so within a
defined repayment period, ‘irrespective of whether it (Zuwon) has received
payment from the Debtor in relation to the invoice(s) . . .’. Should Zuwon fail to
do so, an additional penalty fee of 8% per month , calculated daily, is payable on
the Advance Amount. The agreements provide for security for the due and
punctual performance of Zuwon’s obligations to TPH, which security includes the
suretyships executed by Mr Ndawonde in favour of TPH.
[13] These provisions cast a different light upon the agreements. The Advance
Amount is repayable by Zuwon to TPH, together with the factoring fee, which is
calculated as a percentage of the Advance Amount. This means that Zuwon does
not get paid the Advance Amount as the price of an asset sold to TPH. Rather, the
Advance Amount must be repaid to TPH, together with the factoring fee, within
the repayment period. That bears all the hallmarks of a loan, repayable, with
interest. The risk does not lie with TPH in respect of the redemption of the debt .
If debtors do not pay, Zuwon remains liable for the repayment of the Outstanding
Amount. TPH enjoys security for that repayment. The cession of debts to TPH is
simply an additional form of security for the repayment of the Outstanding
Amount. Once all amounts have been paid to TPH under the agreements, only
Amount. Once all amounts have been paid to TPH under the agreements, only
then does Zuwon become entitled ‘to the remainder of the amount derived from
8
the invoice(s)’. This residual entitlement shows that TPH enjoys rights as a
cessionary for so long as Zuwon is indebted to TPH; thereafter, Zuwon is entitled
to whatever amounts are recovered from the debtors in respect of the invoices.
[14] Taken together, the se provisions of the agreements indicate that the true
relationship between TPH and Zuwon is that of a lender and a borrower for the
loan of money. Those aspects of the agreements that are cast in the language of a
discounting agreement do not perform that function. For the reasons given, what
governs the relationship between TPH and Zuwon is the payment to Zuwon of the
Advance Amount , which Zuwon is obliged to repay, with interest, within the
repayment period. Upon analysis, t he cession of the debt is not, a purchase by
TPH of debt for a price, but a form of security in favour of TPH to secure the
repayment by Zuwon of the Advance Amount. For these reasons, the agreements
are properly characterised as loans and not discounting agreements. And the high
court was correct to so find.
[15] That however is not the end of the enquiry. The agreements may be loans,
but do they constitute a credit facility, as described in s 8(3)(a) of the Act? It is to
this question that I now turn.
[16] Sections 8(1)(a) and (3)(a) read in relevant part as follows:
‘Credit agreements
(1) Subject to subsection (2), an agreement constitutes a credit agreement for the purposes
of this Act if it is -
(a) a credit facility, as described in subsection (3);
(b) a credit transaction, as described in subsection (4);
(c) a credit guarantee, as described in subsection (5); or
(d) any combination of the above.
. . .
(3) An agreement, irrespective of its form but not including an agreement contemplated in
subsection (2) or section 4(6)(b), constitutes a credit facility if, in terms of that agreement –
9
(a) a credit provider undertakes –
(i) to supply goods or services or to pay an amount or amounts, as
determined by the consumer from time to time, to the consumer or on behalf of,
or at the direction of, the consumer; and
(ii) either to –
(aa) defer the consumer’s obligation to pay any part of the cost of
goods or services, or to repay to the credit provider any part of an amount
contemplated in subparagraph (i); or
(bb) bill the consumer periodically for any part of the cost of goods or
services, or any part of an amount, contemplated in subparagraph (i); . .
..’
[17] An agreement is a credit facility if a credit provider undertakes : (a) to
supply goods or services; or (b) to pay amounts determined by the consumer either
to the consumer or at the consumer’s direction or on behalf of the consumer.
Typically, as observed in JMV Textile v De Chalain ,3 these two types of credit
facility have the following application s in commerce. The first concerns the
supply of goods or services at the consumer’s request, with the deferment of the
obligation to pay the price. Store charge cards or accounts are examples. The
second concerns payment to the consumer or on his or her behalf to a third party
(usually a merchant who sells goods or services to the consumer) , with the
deferment of the obligation to repay. The widespread use of credit cards by
consumers exemplifies this type of credit facility.
[18] I have found that the agreements are loans. TPH lends money to Zuwon by
way of the Advance Amount. TPH does not supply goods or services to Zuwon.
Nor can the agreements be understood to provide that TPH pays Zuwon the
Advance Amount, ‘as determined by the consumer from time to time’ as s
8(3)(a)(i) stipulates. This provision contemplates that a consumer will draw upon
3 JMV Textiles (Pty) Ltd v De Chalain Spareinvest 14 CC and Others [2010] ZAKZDHC 34; 2010 (6) SA 173
(KZD); [2011] 1 All SA 318 (KZD) para 14.
10
a credit facility, and determine what amounts are required and when, within the
limits of the facility granted by the credit provider. But that is not what the
agreements provide. Under the agreements, Zuwon borrows a definite sum, the
Advance Amount, and is required to repay the Outstanding amount. There is no
credit facility granted to Zuwon, and no autonomy to decide from time to time
how to make use of this facility.4
[19] It follows that the agreements do not qualify as a credit facility in terms of
ss 8(1) (a) read with 8(3) of the Act. Nor are the agreements discounting
transactions under s 8(4)(a). The definition of a discounting transaction in s 1
concerns the provision of goods and services. As I have found, TPH does not
provide goods or services under the agreements. No other basis was raised before
the high court to suggest that the Act applies to the agreements, nor do I consider
there to be one.
[20] Once that is so, although the high court correctly found that the agreements
constituted loans, its conclusion that these loans ‘fall squarely within the
definition of a credit facility in s 8(3)(a)’ was an error. For the reasons given, the
loans made by TPH in terms of the agreements do not constitute a credit facility.
The Act does not apply to the agreements, and hence the Act was no obstacle to
the judgment that TPH sought before the high court.
[21] Norman AJA has written a concurring judgment (the second judgment) in
which she disagrees with this conclusion. She finds that the agreements constitute
a credit facility in terms of s 8(1)(a) read with s 8(3)(a)(i) of the Act. The second
judgment reasons as follows. First, the amount to be advanced to Zuwon is
4 Something was made of the decisions in Bridgeway Limited v Markam [2008] ZAGPHC 251; 2008 (6) SA 123
(W); Rodel Financial Services (Pty) Ltd v Naidoo and Another [2011] ZAKZDHC 7; 2013 (3) SA 151 (KZD);
Renier Nel Inc and Another v Cash on Demand (KZN) (Pty) Ltd 2011 (5) SA 239 (GSJ) in the judgment of the
high court and by way of submission before us. These cases ultimately turn, as does the present matter, on the
particular agreements in issue.
11
determined by Zuwon ‘in that it is Zuwon that has the invoices to be ‘purchased’
by TPH’ .5 Second, under the agreements, Zuwon’s obligation to repay the
Advanced Amount or a portion thereof is deferred. By way of example, the second
judgment observes ‘the first discounting agreement was concluded on 13 October
2023 and the repayment period was on 13 November 2023. The second agreement
was concluded on 28 November 2023, and the repayment period was on 24
December 2023’.6 Third, the second judgment considers the agreements to be akin
to store cards and credit cards. As with a store card, the credit provider, ‘TPH may
pay to Zuwon (for the benefit of Zuwon) a portion of or the full advanced
amount’.7 And, as with credit cards, ‘if the advanced amount is not repaid in full
within the repayment period there is an additional penalty fee of 8% per month
calculated daily; legal fees and factoring fees that shall be added to the outstanding
amount’.8
[22] I do not agree with this reasoning. As I have observed, in relevant part, in
order to constitute a credit facility, the agreement must be one, in terms of which,
the credit provider undertakes ‘to pay an amount or amounts, as determined by
the consumer from time to time’9 (my emphasis). The undertaking as to deferment
of the consumer’s obligation to repay is a separate requirement that must be
satisfied in order for an agreement to constitute a credit facility.
[23] Under the terms of the agreements, Zuwon does not determine ‘from time
to time’ the amounts to be advanced to it. The Advanced Amount is determined
by the parties to the agreements , upon concluding the agreements, and then
advanced to Zuwon. Zuwon is not accorded any unilateral right to determine how
much of the Advanced Amount to draw upon, if any, and when to do so. No such
5 The second judgment para 43.
6 The second judgment para 43.
7 The second judgment para 45.
8 The second judgment para 45.
9 Section 8(3)(a)(i).
12
term appears in the agreements. And this is so because the agreements do not
provide a credit facility established in favour of Zuwon, upon which Zuwon may
determine to draw, from time to time. Hence a central feature of what is meant by
a credit facility is lacking from the agreements. The Advanced Amount will most
certainly reflect the value that the invoices may have as security for the repayment
of the Advanced Amount. But the provision of security by Zuwon, or to use the
framing of the second judgment, that Zuwon has invoices to be purchased and
used as security, does not confer upon it the right to enjoy a credit facility as that
term is defined in s 8(3)(a)(i).
[24] That Zuwon is required to repay the Advanced Amount, together with other
amounts, is a deferred obligation, but it is not a deferral in the sense contemplated
in s 8(3)(a)(ii)(aa) because this provision references an undertaking by the credit
provider to defer any part of the amount contemplated in s 8(3) (a)(i). That is to
say, an amount determined by a consumer from time to time. For the reasons
given, no such amount was ever paid to Zuwon. Hence, its obligation to repay
TPH at a specified time in the futu re is not a deferred payment constitutive of a
credit facility.
[25] Nor do I consider that the agreements are at all akin to store cards or credit
cards. These commercial arrangements are based upon consumers making
decisions as to what to buy and drawing upon an agreed credit facility to do so.
Zuwon did nothing of the kind. It borrowed a fixed amount of money against the
security of the invoices, and was required to repay this loan. Under the reasoning
of the second judgment, every loan would become a credit facility and that cannot
be reconciled with the Act’s delineation of different species of credit agreements.
The threshold issue
[26] Section 4(1)(a)(i) of the Act reads as follows:
13
‘Application of Act
(1) Subject to sections 5 and 6, this Act applies to every credit agreement between parties
dealing at arm's length and made within, or having an effect within, the Republic, except –
(a) a credit agreement in terms of which the consumer is –
(i) a juristic person whose asset value or annual turnover, together with the
combined asset value or annual turnover of all related juristic persons, at the
time the agreement is made, equals or exceeds the threshold value determined
by the Minister in terms of section 7(1).’
[27] The Act does not apply to a credit agreement where the party to the
agreement is a juristic person with an asset value or annual turnover that equals
or exceeds a threshold determined by the Minister (the threshold value).
[28] Sections 4(1)(b) and 9(4) of the Act read as follows:
‘4 Application of Act
(1) Subject to sections 5 and 6, this Act applies to every credit agreement between parties
dealing at arm's length and made within, or having an effect within, the Republic, except –
(b) a large agreement, as described in section 9(4), in terms of which the consumer
is a juristic person whose asset value or annual turnover is, at the time the agreement is
made, below the threshold value determined by the Minister in terms of section 7(1).
. . .
9 Categories of credit agreements
(4) A credit agreement is a large agreement if it is-
(a) a mortgage agreement; or
(b) any other credit transaction except a pawn transaction or a credit guarantee, and the
principal debt under that transaction or guarantee falls at or above the higher of the
thresholds established in terms of section 7(1)(b).’
[29] Where a consumer, as defined by the Act, is a juristic person and has an
asset value or annual turnover below the threshold value, then if such a consumer
enters into a large agreement, as determined in terms of s 9(4), the Act also does
not apply. The threshold value determined by the Minister is R1 000 000. A large
14
agreement, as determined by the Minister in terms of s 7(1) (b), is one where the
principal debt exceeds R250 000.10
[30] TPH submitted that, ex facie the agreements, in 2023, Zuwon had invoiced
two clients for a cumulative amount of R863 871.80. And if that was so for just
two clients, it was overwhelmingly likely that in 2023 Zuwon’s annual turnover
exceeded R1 000 000. Alternatively, in terms of the agreements , TPH advanced
to Zuwon R290 000 and R270 000. In each agreement, the principal debt exceeds
the threshold determined by the Minister in terms of s 7(1)(b). Thus, it was argued,
the agreements are large agreements, and the Act is not of application to them.
[31] These matters were not traversed in TPH’s founding affidavit. Quite
understandably, given that the question of compliance with the Act arose from the
high court’s intervention in the unopposed motion court. No mention of it is made
in the high court’s judg ment. However, if the threshold issue can be decided on
the papers, it should be.
[32] Although I accept that, on the probabilities, Zuwon’s annual turnover in
2023 was likely to have exceeded the threshold value, there is no direct evidence
of its turnover from its accounts. However, the agreements are attached to the
founding affidavit. The agreements disclose the amounts of the Advance Amount
in each agreement. The Advance Amount is the loan made by TPH to Zuwon, and
hence constitutes the principal debt. The amounts exceed the threshold determined
by the Minister in terms of s 7(1)(b). The agreements are thus large agreements.
Zuwon is a juristic person. It is not possible to determine, on the papers, Zuwon’s
annual turnover in 2023. If it exceeded the threshold value, then the Act does not
apply to the agreements in virtue of s 4(1)(a) of the Act. If Zuwon’s annual
turnover is less than the threshold value, then the Act does not apply to the
10 Determination of Thresholds, GN 713, GG 28893, 1 June 2006.
15
agreements in virtue of s 4(1) (b) of the Act because the agreements are large
agreements.
Conclusion
[33] It follows that the Act does not apply to the agreements, and hence the Act
was not an obstacle to the judgment sought by TPH in its application. Given this
conclusion, there is no warrant to consider the remedy issue.
[34] The application makes out a proper case for judgment against Zuwon in
respect of its indebtedness to TPH. Mr Ndawonde, as surety and co -principal
debtor, is jointly and severally liable for this indebtedness. As to the costs, TPH
has prevailed on appeal. It was entitled to judgment in the high court, and the
liability for the costs thereof is regulated by the agreements and falls upon TPH
and Mr Ndawonde. The costs of the appeal stand on a different footing. Zuwon
and Mr Ndawonde did not seek to oppose the appeal before this Court.
[35] The appeal arose from the issue raised by the high court as to the application
of the Act to the agreements. TPH was required to appeal to reverse the high
court’s judgment and order, and the costs of the appeal, under the agreements,
would fall within the class of costs for which Zuwon and Mr Ndawonde are liable.
Nevertheless, counsel for TPH agreed that this issue falls within our discretion. I
am inclined to think that it would be unfair to saddle Zuwon and Mr Ndawonde
with the costs of t he appeal, given that they arise from the entirely justified
enquiry of the high court as to the application of the Act, and not from any
opposition they advanced.
[36] In the result, the following order is made:
1 The appeal is upheld with no order as to costs.
16
2 The order granted by the high court, is set aside, and replaced with the
following:
‘(i) Judgment is granted against the first and second respondents, jointly
and severally, the one paying the other to be absolved, in the amount of
R785 292.91.
(ii) The first and second respondents are ordered to pay interest on the
amount of R785 292.91 at a rate of 8% per month, from 1 May 2024, until
date of final payment, both days inclusive.
(iii) The first and second respondents, jointly and severally, the one
paying the other to be absolved, are ordered to pay the costs on an attorney-
client scale.’
______________________
D N UNTERHALTER
JUDGE OF APPEAL
17
Norman AJA:
[37] I have read the first judgment by my colleague, Unterhalter JA. I agree with
the exposition of the facts, the finding that the agreements were loans, his findings
on the threshold issue and the order proposed. However, I part ways with the first
judgment on a very narrow issue, namely, its finding that the agreements ‘do not
qualify as a credit facility in terms of s 8(1)(a) read with s 8(3) of the Act.’
[38] The issue of whether the agreement that served before the high court was a
credit facility as defined in s 8(3)(a) of the Act is central to the appeal because of
the finding of the high court that it falls within those provisions of the Act and is
a credit agreement. I deal with the issue by referring to the relevant terms in the
first and second discounting agreements (the agreements). Some of the material
terms in the first and second agreements are similar. I shall refer to the first
agreement which provides in relevant part:
‘5.3.4 The Applicant further agreed to advance to the First Respondent and the First
Respondent agreed to borrow from the Applicant a legal fee for drawing and completion of the
agreement and other transactional agreements relating hereto in the amount of R2 000.00 (Two
Thousand Rand) (Excl VAT) that would be withheld as determined in the agreement and added
to the total amount advanced by the Applicant to the First Respondent, similarly due and
payable before expiry of the Repayment Period.
. . .
5.3.7 The First Respondent unconditionally and irrevocably guaranteed the due and punctual
payment by the Debtor of any and all payments to the Applicant and the First Respondent
agreed to pay by the “Repayment Period”, being at latest the 13 th of November 2023, to the
Applicant the full outstanding amount due to the Applicant.
. . .
5.3.9 If the amounts advanced by the Applicant with all applicable fees, charges and /or levies
as determined in the agreement are not recovered in full prior to the expiration of the Repayment
Period, the Invoices shall be regarded to be irrecoverable, an d this shall constitute a “No
Recovery Event”.’
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[39] Similar terms to those that appear in clause 5.3.4 are contained in clause
8.4.4 of the second discounting agreement. The terms appearing in clause 5.3.7
appear in clause 8.4.7 of the second agreement with a minor change in relation to
the repayment period ‘being at latest the 24 th of December 2023’. Lastly the
second discounting agreement also contains a clause similar to clause 5.3.9 in its
clause 8.4.9. The first discounting agreement was concluded on 13 October 2023
and the second one on 28 November 2023. I shall revert to the s ignificance of
these dates later.
[40] The second agreement described the factoring fee, flat fee and repayment
period as follows:
‘Factoring Fee: A minimum flat fee of 13% (Thirteen Percent) of the Advance Amount,
being R35 100.00 (Thirty-Five Thousand One Hundred Rand). In the event that the Outstanding
Amount is not repaid in full within the Repayment Period, an additional Penalty Fee of 8%
(Eight Percent) per month (calculated daily), on the Advance Amount shall incur until
repayment of the entire Outstanding Amount to the TPH has been received.’
[41] The flat fee of 13% of the advanced amount of R270 000 is R35 100 in the
second discount agreement. In respect of the first discounting agreement the
advanced amount is R290 000 and the flat fee of 13% is R37 700.
‘“Repayment period” means the maximum and latest period allowed for the repayment
of the Advance Amount plus the Factoring Fee and Legal Fee thereon, by CLIENT to TPH and
as determined in paragraph 7 of Schedule 1.’
[42] For context, s 8(1)(a) and s (3)(a) and (b) read, in relevant part, as follows:
‘Credit agreements
(1) Subject to subsection (2), an agreement constitutes a credit agreement for the purposes
of this Act if it is –
(a) a credit facility, as described in subsection (3);
(b) a credit transaction, as described in subsection (4);
(c) a credit guarantee, as described in subsection (5); or
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(d) any combination of the above.
. . .
(3) An agreement, irrespective of its form but not including an agreement contemplated in
subsection (2) or section 4 (6)(b), constitutes a credit facility if, in terms of that agreement –
(a) a credit provider undertakes –
(i) to supply goods or services or to pay an amount or amounts , as
determined by the consumer from time to time, to the consumer or on behalf of,
or at the direction of, the consumer; and
(ii) either to –
(aa) defer the consumer’s obligation to pay any part of the cost of
goods or services, or to repay to the credit provider any part of an amount
contemplated in subparagraph (i); or
(bb) bill the consumer periodically for any part of the cost of goods or
services, or any part of an amount, contemplated in subparagraph (i); and
(b) any charge, fee or interest is payable to the credit provider in respect of –
(i) any amount deferred as contemplated in paragraph (a)(ii) (aa).’ (My
emphasis.)
[43] The Act also defines ‘credit’, when used as a noun, as meaning –
‘(a) a deferral of payment of money owed to a person, or a promise to defer such a
payment; or
(b) a promise to advance or pay money to or at the direction of another person.’
[44] The first judgment finds that: ‘There is no credit facility granted to Zuwon,
and no autonomy to decide from time to time how to make use of this facility.’ I
disagree.
[45] In terms of these agreements the amount to be paid is determined by Zuwon
in that it is Zuwon that has the invoices to be ‘purchased’ by TPH. ‘TPH shall
advance the Advance Amount or first portion thereof to the CLIENT in relation
to the invoice(s) being p urchased by the TPH as determined herein.’ The
obligation to repay the advanced amount or a portion thereof is deferred. For
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example, the first discounting agreement was concluded on 13 October 2023 and
the repayment period was on 13 November 2023. The second agreement was
concluded on 28 November 2023, and the repayment period was on 24 December
2023.
[46] I have had regard to the purpose of the Act, the relevant provisions, the
terms of the agreements and the approach to interpretation set out in Natal Joint
Municipal Pension Fund v Endumeni Municipality11 that:
‘In between these two extremes, in most cases the court is faced with two or more
possible meanings that are to a greater or lesser degree available on the language used. Here it
is usually said that the language is ambiguous, although the only ambiguity lies in selecting the
proper meaning (on which views may legitimately differ). In resolving the problem, the
apparent purpose of the provision and the context in which it o ccurs will be important guides
to the correct interpretation . An interpretation will not be given that leads to impractical,
unbusinesslike or oppressive consequences or that will stultify the broader operation of the
legislation or contract under consideration.’
[47] I find that these agreements are similar to store cards. I say so because the
credit provider, TPH may pay to Zuwon (for the benefit of Zuwon) a portion of
or the full advanced amount. Zuwon is afforded an option of deferment of the
obligation to repay. Similar to credit cards, if the advanced amount is not repaid
in full within the repayment period there is an additional penalty fee of 8% per
month calculated daily; legal fees and factoring fees that shall be added to the
outstanding amount.
[48] Simply put, once the advanced amount has been paid by TPH to Zuwon the
obligation to repay is deferred. Deferment of an obligation to pay is a unique
11 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) para 26. See also Long Beach Home Owners Association v Department of Agriculture,
Forestry and Fisheries and Another [2017] ZASCA 122; 2018 (2) SA 42 (SCA) para 15. Mvoko v South African
Broadcasting Corporation SOC Ltd [2017] ZASCA 139; 2018 (2) SA 291 (SCA) para 32.
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feature of credit facilities. Just like credit or store cards a consumer can pay the
minimum repayment amount or the full amount owed. In this case Zuwon is
granted a repayment period. Once it fails to pay the full outstanding amount
during the repayment p eriod, just like with credit cards or store cards, where
payment is deferred there are certain charges that are levied, such as factoring fee
(minimum flat fee of 13% of the advanced amount and additional penalty fee of
8% per month calculated daily); and legal fees. This fits squarely within the
provisions of s 8(3)(a)(i) and s 8(3)(a)(ii)(aa) and s 8(b)(i) of the Act.
[49] I find that these agreements are credit facilities and thus constitute credit
agreements. My view in this regard is fortified by the decision of this Court in
Asmal v Essa,12 where this Court when dealing with a similar issue stated:
‘Common to all the forms of a credit agreement, including credit facilities and credit
transactions, is the requirement of payment of a “charge”, “fee” or “interest” as envisaged in
s 8(3) (a)(ii) and s 8(4)(f)(ii), respectively. The terms “charge”, “fee” and “interest” are,
however, not defined in the Act. Bearing in mind that the statutory context of s 8 (and indeed
all the provisions of the Act) is important in the interpretation of its provisions, it is clear from
their ordinary meaning and the context in which the terms are used that they were meant to
cover any consideration or payment to be made by a credit borrower to a credit provider for
the use of credit under the auspices of the Act. Regard must also be had and effect given to the
objects and purposes of the Act, set out in s 3, in interpreting its provisions.’
[50] The first judgment does not engage with the deferment of payment and the
charges levied on the deferred amount including the penalty fees payable on the
outstanding amount as envisaged in the above-mentioned provisions of the Act. I
outstanding amount as envisaged in the above-mentioned provisions of the Act. I
find that the high court was correct in its finding that the agreement s fall within
the definition of a credit facility in s 8(3)(a); and are thus credit agreements.
12 Asmal v Essa [2014] ZASCA 62; 2016 (1) SA 95 (SCA); [2014] 3 All SA 115 (SCA) para 9.
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[51] For the reasons advanced above, the loans made by TPH to Zuwon in terms
of the agreements do constitute credit facilities and are credit agreements.
However, because the agreements are large agreements, as found in the first
judgment, the application of the Act is excluded.
___________________________
T V NORMAN
ACTING JUDGE OF APPEAL
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Appearances:
For appellant: M Louw (with him JH Lerm)
Instructed by: Van Rooyen & Associates Inc Attorneys, Centurion
Honey & Partners Inc., Bloemfontein.